When it comes to a real estate deal, as long as there is a “meeting of the minds” between the buyer and the seller the deal can & will move forward.  When one party wants to buy and one wants to sell, good agents can make the deal happen. For first time home buyers though, there is more to the story.

First time home buyers

This “meeting of the minds” is not enough with lenders since they are taking a risk when financing a home.  Here are five things you should do if you are a first time home buyer to help your lender.

Your Cash Situation

Have a true and accurate picture of your “cash on hand” situation and cash you could access in a pinch.  How much you have in your accounts and how much is in any accounts you could access (like a 401 K) will be critical figures to have on hand for your lender when considering a purchase.

Cash Flow vs. Debt

Another good figure to have on hand is your monthly cash flow.  Take your monthly income and deduct ALL non-discretionary spending (bills) to see what you have to work with.  If this cash flow number is low, consider eliminating discretionary spending to increase your reserves.  It is not uncommon today for people to be paying $200 -$300 per month for cell phones, another $200 -$300 month for cable and another $200 – $300 per month for electricity which could be draining much needed cash.

Cancel anything you can and reduce spending to save money which might be needed later.  You can always add these items back after you purchase.  If the appraisal comes in low and the seller will not negotiate, you may need to have extra cash on hand to complete the transaction.

I recently helped some first time home buyers who were living in a rented apartment.  When we discussed their financial situation, although they were making a lot of money their expenses on cable, cell phones, etc. was ridiculously high.  I advised them to cancel everything and, as it turned out, they needed all the cash to close the deal.

Meet Early With Several Lenders

As in all transactions, you should only be working with professionals you like and trust.  Especially in an area like buying a house that is unfamiliar to you.  Interview a couple of lenders before looking at any houses with a real estate agent to see which lender is the best fit for you and your needs.

Looking at homes is the final step in the buying process, not the first.

Don’t Make Any Financial Changes

Once you have picked a lender and been pre-approved, don’t move any money, even within your own accounts, without consulting your lender.  You could delay the closing and be forced to explain the transfer of funds.  Or worse, you might risk your deposit.

Don’t Make Any Large Purchases

Don’t buy anything like furniture or a car or anything else that could cause you credit to be “pulled”.  Again, this could delay the closing or worse, jeopardize your deposit.

When you are interviewing real estate agents to find the right one, consider whether or not they ask you about your financial health before showing you houses.  This will keep you from getting into trouble during the deal.

The Take Away

Remember, in today’s financial environment your lender is driving the transaction forward.  All the desire in the world will not get you the home you want so help your lender make it easy for you.

If you want to have a conversation about meeting your real estate needs call me at 561.762.4073.

Richard Sites, Realtor